Municipal-Owned Utilities: The Local Climate Change Solution

It’s no great secret that Duke Energy boasts an infamous reputation of being ineffective and expensive. After Duke’s most recent rate hike, more than 80 percent of North Carolinians across political parties surveyed said the company itself should absorb the cost of cleaning up coal ash. At the same time, state Democratic lawmakers have proposed doubling the state Renewable Energy Portfolio Standard’s goal to 25% renewable energy by 2021. This proposal received high levels of support from Democrats and Independents and an even split among Republicans. Based on these figures, the most popular solution would involve disciplinary sanctions on Duke Energy for its negligence in addressing coal ash and mandating acceleration of its extremely slow transition to renewables. The former solution seems unlikely, as it would be difficult to pass policy at the state level that could punish or hold Duke Energy accountable. Democrats and Republicans alike are not eager to rock the boat, and many receive campaign contributions from the power conglomerate. If policymakers wish to increase renewable energy use in North Carolina while also holding Duke accountable for environmental negligence, they should consider municipal-owned utilities as a viable policy avenue.

A riverbed sample showing coal ash from a Duke Energy spill in Eden, North Carolina (source)

Municipal-owned utilities are one of the easiest ways to successfully transition to renewable energy without implementing a top-down carbon control mechanism. Shifting from investor-owned utilities (IOUs) like Duke Energy to municipal utilities would allow city leadership to move completely to renewable energy. Residents would have no legal obligation to purchase electricity through the “renewable energy” package, which would likely be more expensive than current options. Municipal-owned utilities, like those in Georgetown, Texas, the largest city in the US to transition to 100% renewable energy, have allowed greater freedom in switching energy sources with minimal economic repercussions. There are substantial concerns, however, regarding increasing energy efficiency and reducing emissions from transportation without changing current city structures and landscapes. Furthermore, without increasing energy efficiency, some investments in renewable energy could be unnecessarily costly, as reducing energy consumption is often cheaper than investing in new renewable capital.

Public opposition to municipal utilities depends largely on how energy prices would change as a result of a transition to renewables. Because municipal utilities have a slight price advantage nationally, at $0.0957/kWh versus IOU’s at $0.1003/kWh, a well-implemented municipal utility could actually reduce consumer electricity prices, contrary to the narrative Duke may peddle. This price advantage allows for investment in renewables from the municipal utility while still offering competitive prices to consumers, suggesting that constituents in these cities would support the environmental and economic benefits of this policy option.

Of course, municipal utilities are advantageous by nature of their design. Each utility is run by the municipality that it provides power to. While North Carolina voters cannot hold Duke Energy accountable despite its historic unpopularity, a municipal utility might provide them a platform as constituents of said municipality. If a municipal utility’s rates reached unacceptable highs, for example, or the local transition to renewables was too gradual, residents could support candidates who would improve the utility’s functioning.

A years-long battle to move from an IOU to a municipal utility in Boulder, Colorado is an excellent case study in examining how such a transition would play out. Investor-owned utilities have protested and fought the transition in Boulder for almost a decade. In North Carolina, Duke lobbyists and lawmakers have expressed support for incorporating Duke Energy’s monopoly into many of our state laws making any locale attempting to transition to a municipal utility subject to a host of lawsuits. For this reason, before any municipality is able to seamlessly transition to a municipal utility, our state lawmakers must take action.

Increasing the proportion of renewable energy. Increasing local control and accountability. Effectively managing price increases from energy usage. These are all issues that can be ameliorated by the implementation of municipal utilities across our state. In the realm of energy policy, our lawmakers need to start taking a close look at not only at which energy sources we are using, but also whether our current focus on Duke as a monopolistic provider is the right direction for our state.